India's tobacco exports surged 166% in value over the past decade to Rs 17,192.04 crore

Over the last ten years, the exports of tobacco and tobacco products have increased about 53.10 per cent in quantity and about 166.51 per cent in value terms, the government informed Parliament. The Ministry of Commerce and Industry in a written reply submitted by Union Minister Piyush Goyal in Lok Sabha, highlighted that shipments rose from 240.93 million kg valued at Rs 6,450.66 crore (USD 958.68 million) to 368.85 million kg valued at Rs 17,192.04 crore (USD 1,948.98 million). The figures establish India as the second largest producer of tobacco in the world after China. To support the primary sector, the government undertook multiple interventions designed to safeguard the interests of Flue-Cured Virginia (FCV) tobacco growers. These measures included "promoting Good Agricultural Practices (GAP) to improve productivity and quality through the supply of quality seeds developed by the National Institute for Research on Commercial Agriculture (NIRCA), and fixing the authorised crop size annually in consultation with stakeholders to align production with market demand and promote price stability."

The reply further detailed that "the electronic auction platform has also been strengthened to ensure transparent price discovery and timely payments to the growers." Driven by these market interventions, the average price realised by FCV tobacco farmers increased from Rs 134.43 per kg to Rs 251.14 per kg, marking an overall growth of 86.82 per cent. In addition to agricultural support, welfare initiatives were extended directly to the farming community. Under the Tobacco Board Growers' Welfare Scheme, more than 1,300 growers benefited during 2025-26 through financial assistance provided for natural and accidental deaths, medical treatment, education, marriage, and the repair of tobacco barns damaged by natural calamities. The Ministry noted that to address illicit trade and tax evasion in the sector, the "Government has introduced a capacity-based levy under Central Excise for specified tobacco products with effect from 01.02.2026. Under the Goods and Services Tax regime, Rule 31D has been inserted in the Central Goods and Services Tax Rules, 2017, with effect from 01.02.2026, providing for valuation based on Retail Sale Price to ensure tax collection at the first stage of supply."

The facility of zero-rated supply of tobacco products on payment of Integrated Goods and Services Tax, with refund of such tax, was withdrawn for better monitoring. Manufacturers of pan masala, tobacco, and similar goods were required to declare production capacity, machinery, and actual production on a monthly basis. Furthermore, "Section 148A has been inserted in the Central Goods and Services Tax Act, 2017 to enable a Track and Trace Mechanism for evasion-prone commodities, with Section 122B prescribing penalty for non-compliance, thereby strengthening enforcement against tax evasion."